As a matter of principle, I do not gamble.
There is a theological reason for this. It is the doctrine of the sovereignty of God. Calvinists have opposed gambling for centuries. Gambling assumes that God is not sovereign; rather, either chance is sovereign or the law of large numbers is sovereign. Neither is sovereign. So, gambling is therefore a religious act of defiance: a public testimony against the sovereignty of God.
I figured this by age 20, but a decade later, I found a 17th-century sermon on lotteries when I was working on my Ph.D. dissertation on the view property Puritan New England. It was by Cotton Mather. He was opposed to lotteries. So were the Puritan clerics of Boston. But by the later 1600’s, their influence was fading.
INSURANCE IS NOT GAMBLING
I do believe in the power of the law of large numbers. This is why I believe in insurance. But Murray Rothbard convinced me in 1963 of the fundamental difference between gambling and insurance. In Man, Economy, and State (1962), he wrote this:
It is not accurate to apply terms like “gambling” or “betting”
to situations either of risk or of uncertainty. These terms have
unfavorable emotional implications, and for this reason: they
refer to situations where new risks or uncertainties are created
for the enjoyment of the uncertainties themselves. Gambling on
the throw of the dice and betting on horse races are examples of
the deliberate creation by the bettor or gambler of new
uncertainties which otherwise would not have existed.
The entrepreneur, on the other hand, is not creating uncertainties
for the fun of it. On the contrary, he tries to reduce them as
much as possible. The uncertainties he confronts are already
inherent in the market situation, indeed in the nature of human
action; someone must deal with them, and he is the most skilled
or willing candidate. In the same way, an operator of a gambling
establishment or of a race track is not creating new risks; he is
an entrepreneur trying to judge the situation on the market, and
neither a gambler nor a bettor (2nd ed., Mises Institute, p. 555).
Insurance is one of the great discoveries in the history of man. It enables people to secure themselves against the effects of statistically predictable negative events in life. By surrendering ownership of money in advance, we gain legal access to far more money in the future, if some statistically predictable negative event occurs in our lives.
I don’t believe any of this is random, but I surely believe in taking advantage of insurance to protect myself against the outcome of statistically predictable aggregate events.
Gambling is a zero-sum game. Somebody wins because other people lose. I don’t want to win on that basis unless the nature of the game is imposed by the real world, and therefore is not a game. Commodity futures speculation is a zero-sum transaction, but it is not a zero-sum game. It enables people who don’t want to bear uncertainty, namely, producers, to transfer this uncertainty to speculators. Then speculators enter into a zero-sum transaction with each other. Out of this competition comes an array of prices. These prices guide other producers free of charge — a tremendous benefit to society. This is no game.
My antipathy to lotteries goes back to Cotton Mather and Murray Rothbard — an unlikely pair of teachers.
(For the rest of my article, click the link.)